No. 13632 INTHE SUPREME COURT OF THE STATE OF MONTANA 1977

MICHAEL PURINGTON, Plaintiff and Respondent,

-vsSOUND WEST, A Corporation,Defendant and Appellant.

Appeal from: District Court of the Fourth Judicial District, Honorable Edward T,Dussault, Judge presiding. Counsel of Record: For Appellant: Jordan, Sullivan and Baldassin, Missoula, Montana Lee A. Jordan argued, Missoula, Montana For Respondent : Worden, Thane and Haines, Missoula, Montana Ronald A. Bender argued, Missoula, Montana

Submitted: 

# KAY26 

## 1977

Decided: 

## JUN29 

### 1977

Filed: FJUN 

## 29 

## 19nMr. Justice Frank I. Haswell delivered the Opinion of the Court.
This is an appeal from the district court's denial of defendant's motion to set aside a defaultjudgment entered in Missoula County. Plaintiff 

### isMichael Purington, a professional musician with the Lost Highway Band, who purchased a sound system for $1,350 from defendant Sound West, a corporation,in the summer of 1975. Inthe fallof 1975 the sound system ceased towork properly and eventually ceased functioning altogether. According to the complaint, defendant assured plaintiff the malfunction would be repaired,but plaintiff was compelled toobtain a substitute sound system. Plaintiff alleged that on November 3, 1975, defendant represented tohim that ifhe would return the sound system, defendant would refund the purchase price. Plaintiff alleged he returned the sound system, but no refund was made. On April 20, 1976plaintiff filed a complaint against defendant in three counts: Count I sought refund of the $1,350 purchase price with interest at

### 6%from November 

### 3, 1975 to date of judgment; Count I1 sought damages of $10,000 forbreach of implied warranties of merchantability and fitness for a particular use; and, Count 111 sought $10,000 compensatory damages d and $10,000 punitive damages for false repres&ations by defendant inducing plaintiff toreturn the sound system to defendant. The sheriff's return showed personal servicewas made

on JimRhines, president of defendant corporation, on April 

### 21, 1976. On May 20 default of defendant was entered by the clerk 

### of court. 

### On June 10plaintiff testified in support of his complaint, but his testimony was not reported and 

### isnot before us.OnJune 24 a defaultjudgment was entered by the district court awarding plaintiff $1,350 with interest at 

### 8%from July 

### 1, 1975 to date of judgment; damages of $3,000 for loss of wages, use and reputation; andplnitive damages of $1,500. Notice of entry of judgment was mailed todefendant on June 25. On July 1defendant filed

### a written motion to set aside the judgment 

### on the grounds defendant was never served in the action and had no notice of the action atany time. The motion also sought

a hearing and a stay of execution pending hearing. 

### On the same day, the district court set a hearing for July 

### 12and stayed execution on thejudgment. 

### On July 12a substitution of attorneys for defendant occurred. Atthe commencement of the hearing on that date, defendant's

new attorney moved the district court toadd two additional grounds to 

### itsmotion to set aside the defaultjudgment: (1) 

### Inadvertence and excusable negligence of defendant, and (2) that the defaultjudgment differs substantially from the prayer of the complaint. An affidavit of merits was filed together with a proposed answer toplaintiff's complaint. The substance of these documents was that defendant had not been served in the action and defendant had a meritorious defense to the action, viz. the malfunctioning of the sound systemwas caused entirely by plaintiff's misuse of the equipment. JimRhines, president of defendant corporation, testified in support of the motion to set aside the defaultjudgment. The gist of his testimony was that he had never been served in the action; that had he been served, he would never have permitted the default; and that he had a meritorious defense to the action, The district court continued the hearing for the purpose of locating the sheriff's deputy who signed the certificate of service,On September 

### 27 plaintiff filed a motion to dissolve the stay order and permit execution on thejudgment. Attached to this motion was the affidavit of the sheriff's deputy, who had been located by plaintiff's attorney in the state of Utah, that she personally served JimRhines, the president of defendant corporation, with a copy of the summons and complaint inthe action on April 21, 1975, in the offices of defendant at2701 Brooks Street inMissoula, Montana. A furtherhearing was held on September 30. Atthis hearing Rhines testified again. He again denied he had been served and indicated only two other suits against the corporationhad gone by default, one for $300.60 and one for $133. He testified that these defaults were permitted on advice of counsel as the costs of defense would exceed the amounts sued for. Atthe conclusion of the hearing, defendant's motion to set aside thejudgment was denied. Plaintiff's motion to dissolve the stay of executionwas denied. 

### On October 28, defendant filed 

### itsnotice of appeal from the order of the districtcourt, Missoula County, denying defendant's motion to set aside the defaultjudgment. Defendant alleges an abuse of discretionby the district court in four particulars: 1) Refusing to set aside the defaultjudgment on the grounds of defendant's inadvertence or excusable neglect. 2) Awarding interest greater than prayed for inthe complaint. 

### 3) Ingranting any judgment on Counts I1 and 111. 

### 4) Inawarding punitive damages inan action upon a contract.Rule 55(c), M.R.Civ.P., provides inpertinent part: "For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordancewith Rule 60(b)

# ** *.I1 Rule 60(b), M.R.Civ.P., provides inrelevant part: 

## "*

# ** upon such terms asarejust, the court may relieve a party

# ** * from a finaljudgment

# *

# ** for the following reasons: (1) mistake, inadvertence, suprise, or excusable neglect

# * *

# *." A motion to set aside a defaultjudgment 

### isaddressed to the sound discretion of the trialcourt and this Court 

### willnot interfere except upon a showing of manifest abuse. Keller v. Hanson, 157Mont. 307, 485 P.2d 705; Johnson v. Matelich, 163 Mont. 329, 517 P.2d 731. Here the only showing of inadvertence or excusable neglect

was the testimony of 

### JimRhine that he had never been served inthe action. To the contrarywas the certificateof service of the deputy sheriff and the absence of any evidence that defendant attempted to locateher, depose her, or secure her testimony in person. 

### It 

### is axiomatic that the burden of proof 

### ison the moving party, here the defendant, to establish inadvertence or excusable neglect. The testimony of JimRhines created no more than a conflict inthe evidence on the issue of servicewhich

was resolved against defendant by the trialjudge. Under such circumstances, we find no abuse of discretionby the trialjudge inrefusing to set aside the defaultjudgment on this ground. An error inawarding interest on the purchase price of the sound system 

### is clear on the face of the record. The prayer in plaintiff's complaint asks for interest atthe rate of 6%per year
on $1,350 from November 

### 3, 1975 to date of judgment. The judgment awards interest atthe rate of 

### 8%per year on $1,350 from July 

### 1, 1975 todate of judgment. Rule 54(c), M.R.Civ.P., provides:"A judgment by default shallnot be different inkind from or exceed inamount that prayed for in the demand forjudgment. 

# * * *I1 Accordingly, the interest award 

### is ordered amended inconformity with the prayer inthe complaint. The third claim of error 

### isthat Counts 

### I1 and 

### I11 failto allege any damass or cause of action. Inour view Count 

### 11 clearly states

### a claim forbreach of implied wananties and seeks $10,000 damages by reason thereof. We also find Count 

### I11 states

a claim for relief based on false representationsby defendant and seeks $10,000 campensatory and $10,000 punitive damages therefor. However, we find that on 

### its face thejudgment awarding damages on those counts isbeyond the power of the district court to award. 

### On Count 

### 11 the district court made a specific finding that "the Plaintiff has been damaged inthe amount of Three Thousand and ~o/100 Dollars ($3,000.00) for loss of wages, use, and reputation" and awarded damages inthat amount. Such damages forbreach of warranties aredefined as incidental and consequentialdamages inthe Uniform Commercial Code. Section 87A-2-715, R.C.M. 1947. Also see sections 87A-2-11 and 87A-2-714, R.C.B. 1947. They are special damages, not general damages. The distinction is---special damages are the naturalbut not necessary result of the wrong orbreach; whereas general damages

are damages the law would impute as the natural, necessary and logical consequence of the wrong orbreach. 

### 25 C.J.S. Damages 

### 5131.Special damages must be specificallypleaded tobe recoverable. Rule 9(g), M.R.Civ.P. Here, these items of special damages were not pleaded, defendant had no notice that specialdamages were claimed, and the district court had no power or authority to award special damages in 

### itsdefaultjudgment. The award of $3,000 damages for these items 

### isordered stricken from thejudgment

# . The final claim of error concerns the award of $1,500 punitive damages on Count 111. Defendant contends punitive damages arenot recoverable inan action arising from contract, citing section 17-208, R.C.M. 1947. We have no quarrelwith this general proposition or this statute. However, Count 111 

### isbased on tort, not contract, being a claim for damages based

on false representations of a refund of the purchase price, if plaintiff would return the sound system. See Paulson v. Kustom Enterprises, Inc., 157Mont. 188, 483 P.2d 708. Again, however,

we find that the judgment on its face 

### isbeyond the power and authority of the court tothe extent it awards plaintiff punitive damages. Punitive damages cannot be awarded where there areno actual damages. Gilham v. Devereaux, 67 Mont. 75, 214 P. 606. Here thejudgment denied plaintiff's claim of actual or compensatory damages on Count 111, so an award of punitive damages

was beyond the power or authority of the district court. The award of $1,500 punitive damages 

### is ordered stricken from the judgment

# . This cause isremanded tothe district court for entry of judgment inaccordance with this opinion; or atthe election of plaintiff, within 15 days of the datehereof for vacation of the entirejudgment, the filingand service of an amended complaint and adversary retrial. Each party shallbear 

### its own costs.

Justice